A model-based assessment of first-mover advantage and climate policy

This paper provides a model-based macroeconomic assessment of First-Mover Advantage (FMA) in environmental technologies, in which a European sector becomes world leader and captures the global market for a particular technology. The E3MG model is used to assess a set of scenarios where the FMA is established in a range of renewable technologies. Although to some extent dependent on scenario assumptions, the model results show that FMA could provide a small but noticeable boost to European GDP (of some 0.5 %) and employment, which could go some way to countering possible losses in production from implementing ambitious climate policy. The impacts are found to be temporary in nature, but some of the sectors that benefit the most are also those that could be expected to lose out from higher energy prices.